Asked by Alberto Perez on Apr 28, 2024
Verified
On July 1,Shady Creek Resort borrowed $250,000 cash by signing a 10-year,8% installment note requiring equal payments each June 30 of $37,258.What is the journal entry to record the first annual payment?
A) Debit Cash $250,000; debit Interest Expense $37,258; credit Notes Payable $287,258.
B) Debit Interest Expense $37,258; credit Cash $37,258.
C) Debit Interest Expense $20,000; credit Cash $20,000.
D) Debit Interest Expense $20,000; debit Interest Payable $17,258; credit Cash $37,258.
E) Debit Interest Expense $20,000; debit Notes Payable $17,258; credit Cash $37,258.
Installment Note
A debt instrument that requires a series of periodic payments of both principal and interest until the debt is paid in full.
Journal Entry
A record in the books of accounts that documents a financial transaction, showing the debit and credit effects.
Interest Expense
Costs incurred by an entity for borrowed funds, which are typically reported on the income statement within the financing or operating sections.
- Comprehend the journal entry recording for various types of bond transactions, such as issuance, interest payments, and amortization.
Verified Answer
Learning Objectives
- Comprehend the journal entry recording for various types of bond transactions, such as issuance, interest payments, and amortization.
Related questions
A Corporation Borrowed $125,000 Cash by Signing a 5-Year,9% Installment ...
The Journal Entry to Record the Issuance of the Bond ...
On January 1, Year 1 a Company Borrowed $70,000 Cash ...
The Entry to Record the Semiannual Payment and Amortization of ...
Accrued Interest on Bonds Which Sold Above Face Value ...